Planning Phase of the Jalupa Company - Case Study Example

Planning Phase of the Jalupa CompanyProblem DescriptionThe problem that arose in the planning phase of the Jalupa Company is that it wanted to penetrate the current radio and musical instruments industry using the social media portals. This is because the potential customers were mainly the baby boomers generation who were now aging and a new market had to be created. In this regard, the nature of the problem to be solved was the market entry strategy that could yield the expected returns after 5 years.

The problem is compelling because it is financially enticing in terms of gross margins on the guitars and guitar amplifiers. The cause of action is to generate a decent investment that will see the strategy take off for the next 5 years. The facts that support this problem definition are that Jaluga has already created a JalupaBook that will see it reap higher returns. Another fact is that the margins will remain without having to split them into other costs. Proposed Solution DescriptionThe future of the Jaluga solution is that will attract more clients from different age groups in a bid to keep the margins constant.

This is because it will incorporate different technological advancements to control its market share. I want the new system to bring together users with different musical instrument requirements to interact and share their experiences. SponsorDave D, who is the Marketing Group Vice President, is the individual who has shown interest in the outcome of the project. He is the best person for the project because of his vast experience in the industry, political connections and expertise in musical instrument marketing.

Start DateThis initiative shall start in 5 years time because of impending considerations of sourcing for funds and sponsorships. The prevalence of e-marketing and social media are the internal or external events that take place to justify the date to be the perfect one. Completion DateThe completion date shall be 2020 because the JalugaBook shall have gained prominence among the new users and advertisers. This is the best date because all stakeholders will have understood the significance of conducting online businesses.

Estimated CostThe estimated cost for this initiative is $50 million, which shall cater for advertising expenses, installation and maintenance services. The interest rates for the years= 1st yr (6% x 50,000,000) = $30,000,000 (50,000,000-30,000,000)=$20,000,0002nd yr (20% x 20,000,000) = $40,000,000 $50,000,000-10,000,000+20,000,000 $60,000,000 x 6% = 36,000,000 $60,000,000-36,000,000 = $24,000,0003rd yr 6% x 24, 000, 000 = 1,440,000 60,000,000-1,440,000= $58,560,000 4th yr 6% x 58,560,000 = $3,523,600 60,000,000-3523600 = $56,486,4005th yr 6% x 56486400 = $3,389,184Estimated BenefitsThe estimated benefit that the organization will get is $500million in intangible benefits.

However, there are enough benefits to pursue if the organization reduces the expenditures to be incurred. FeasibilityThere are a number of risks that the management fears might affect their planning strategies. For instance, the operational fear is the creation of JalugaBook since this is the organization’s first project in this field of online commerce. As a result, it might prove difficult to attract consumers and advertisers because some of them may not be comfortable conducting online business.

The financial fear by the management is that repaying the $50million loan with the annual $10million balloon payments might be a heavy burden to carry. On the technical feasibility, it is also apparent that the current personnel in the company may not possess the necessary skills to undertake the new changes since they are junior technicians. Overall AssessmentTo solve the operational risks, the management should look for a loan that attracts a lower interest rate. It is also prudent to hire experienced technicians from other organizations who understand how to operate such channels.

As a result, the project is viable because it shall yield favorable returns to the investors and the owner, which is a positive initiative.